Social capital and informal economy: an anthropological fieldwork study of a favor bank on a Danish island

An informal economy consists of economic activities not regulated by the state. Informal economies thrive in developing countries with weak formal institutions. They can, however, also be found in OECD countries, but here they are somewhat understudied. From a social capital perspective, it therefore becomes interesting to study informal economic practices in Western societies as well. Which forms of social capital underpin these practices? How do they relate to formal and informal institutions and, ultimately, to local economic development? Can informal economies based on social capital and informal institutions complement, or substitute, formal institutions and by this contribute to local economic growth and demographic sustainability? We suggest that future social capital studies direct focus on the substantive, informal economy associated with livelihoods and embedded in cultural systems with moral foundations (Polanyi, 1977). To illustrate, we present a case from rural Denmark: The village of Sønderho on the island of Fanø. Sønderho is famous for its strong local community, rich in both bonding and bridging social capital. Based on anthropological fieldwork from 2019, we explore how Sønderho dwellers run what can be termed a favor bank (Putnam, 1994, p. 9), which forms the backbone in an informal economy termed The Sønderho Lifestyle.